Transaction volume on Apple Pay has grown fivefold
Earlier in this series, we discussed Apple’s (AAPL) App Store and Apple Music. Another promising product for Apple under its Services business is Apple Pay. According to Apple, Apple Pay doesn’t contribute meaningfully to the segment in terms of revenues, but a growing number of transactions on Apple Pay suggests that the future potential is huge.
During the last quarter’s earnings conference call, Apple said that the transaction volume on Apple Pay has grown more than fivefold year-over-year. The company also stated that it is adding 1 million new users every week on Apple Pay. Along with growing its transaction volume, Apple is also trying to increase the number of Apple Pay locations.
Apple Pay is now compatible with more than 10 million locations
According to Apple, there are now more than 10 million contactless Apple Pay locations around the world, including 2.5 million in the United States. Some prominent Apple Pay partners include Starbucks (SBUX), ExxonMobil (XOM), and retailers such as Best Buy (BBY).
Starbucks plans to roll out the Apple Pay service at its 7,500 stores by the end of this year, while ExxonMobil users will be able to pay at the pump at 6,000 gas stations. Apple also continues to expand its Apple Pay service internationally. A few months back, Apple launched Apple Pay in Singapore, making it the second country in Asia after China (FXI) to come aboard. Apple also plans to bring this service to Hong Kong and Spain in 2016.
Clearly, Apple is looking to leverage the fast growth potential of the mobile payments market. The research company eMarketer estimates that the US proximity mobile payment market could triple in 2016, growing from ~$8.7 billion in 2015 to $27.1 billion in 2016. According to eMarketer, proximity mobile payments are “point-of-sale transactions that use mobile phones as a payment method, via tapping, waving, and similar functionality.” The above graph shows how this market could continue to grow at a healthy rate in the future.